…Urges oil majors to ramp up investments
…Cuts oil production by 50,000 bpd in March, OPEC tightens quotas – report
By Charles Ebi
Federal Government has said it would soon begin enforcement of the “drill or drop” provisions of the Petroleum Industry Act (PIA), which empowers the government to take over idle assets abandoned by oil firms for an extended period.
This was disclosed by the Minister of State for Petroleum Resources ,Oil, Sen. Heineken Lokpobiri, at the Cross Industry Group ,CIG, Meeting in Florence, Italy, where he engaged industry leaders on challenges and opportunities in Nigeria’s energy sector. He said the decision is part of efforts to boost production in Nigeria.
“We cannot continue to have assets sitting idle for 20 to 30 years without development.
“If you are not utilizing an asset, it neither adds value to your books nor to us as a country. We will take back these assets and allocate them to those willing to invest”, Lokpobiri warned.
He advised that to maximize resources, the government is encouraging industry players to consider farm-out agreements where smaller firms develop underutilized assets or collaborate on shared infrastructure instead of incurring high costs on new Floating Production Storage and Offloading ,FPSO, units.
“We encourage industry players to explore collaborative measures such as shared resources for contiguous assets, farm-outs, and the release of underutilized assets to operators ready to invest in production.
“Otherwise, like any responsible government, we will take back these assets and allocate them to those willing to go to work”, he said.
Senator Lokpobiri also called on International Oil Companies ,IOCs, operating in Nigeria to increase their investments in the country’s oil and gas sector.
He emphasized that the government has put new fiscal incentives in place to attract more capital into exploration and production.
Lokpobiri noted that President Bola Tinubu’s administration had created an investment-friendly climate, including executive orders incentivizing deep-water exploration. However, he urged IOCs to take decisive action, particularly in making stronger commitments to engineering, procurement, and construction ,EPC, projects.
“The government has done its part by providing the requisite and investment-friendly fiscal policies, including the President’s Executive Order incentivizing deep water investments.
“Now, the ball is in the court of the IOCs and other operators to make strategic investment decisions that will drive increased production and sustainability in the sector”, the Minister said.
The Chairman of the Oil Producers Trade Section ,OPTS, Osagie Osunbor, commended the government’s engagement with industry players and acknowledged the need for increased investments.
“The Minister’s engagement has provided critical insights and has also challenged us as industry players to step up efforts to increase production”, Osunbor told the News Agency of Nigeria.
Nigeria is Africa’s largest oil producer in Africa, but it struggles to increase production due to issues such as infrastructure decay, oil theft, and underinvestment.
By enforcing its policies and providing incentives, the government hopes to revitalize the sector, ensuring both domestic energy security and sustained international exports.
Meanwhile, Nigeria made the biggest oil production cut among members of the Organization of Petroleum Exporting Countries ,OPEC, in March, reducing output by 50,000 barrels per day.
According to a Bloomberg report, Nigeria made the cut to maintain an average of 1.5 million barrels per day, in line with its OPEC quota, as the cartel urged tightened quotas among its members.
According to a Bloomberg survey, OPEC reduced overall production by 110,000 barrels per day in March.
The report notes that the cut in Nigeria’s production follows delays in loading Bonny Light crude due to the recent explosion at the Trans-Niger Pipeline.
The pipeline, which is a critical infrastructure for Nigeria’s crude exports, has frequently faced operational disruptions, affecting the country’s ability to meet production targets.
President Bola Tinubu blamed the explosion on the political crisis in Rivers State. Consequently, the President declared a state of emergency in the state and sacked all elected officials.
Bloomberg reported that Iraq followed with the second-largest reduction after Nigeria, cutting output by 40,000 barrels per day to 4.15 million barrels. Despite this, Iraq maintained above its agreed limit of 4 million barrels per day.
However, the United Arab Emirates increased production by 30,000 barrels per day, further exceeding its quota.
Meanwhile, OPEC+ led by Saudi Arabia and Russia has expressed readiness to gradually restore production and increase supplies to stabilize global oil prices.
The group is expected to add roughly 138,000 barrels per day this month as part of a phased increase running through late 2026.
The decision of the cartel to ease production cuts follows U.S. President Donald Trump’s request to Saudi Arabia to “cut the price of oil” by increasing production. It is uncertain whether this was what informed the decision or not.
Bloomberg’s survey is based on ship-tracking data, information from officials, and estimates from consultants Rapidan Energy Group, FGE, and Rystad Energy.
The cuts highlight OPEC’s ongoing struggle to enforce compliance among its members, with some countries persistently exceeding their quotas despite repeated calls for discipline.
It is unclear if Nigeria’s reduced output is in compliance with OPEC’s directive of production cuts or a consequence of the perennial challenges impeding improved oil production.
The administration of President Tinubu set a target of 2.06 million bpd this year, but the country struggles to produce 1.5 million bpd.